SEBI Proposes Establishment of Performance Validation Agency to Verify Intermediary Claims
- ByStartupStory | September 1, 2023
The Securities and Exchange Board of India (SEBI) has put forward a proposal to create a Performance Validation Agency (PVA) that would validate performance claims made by registered intermediaries in the capital markets. This initiative aims to enhance the credibility of intermediaries such as investment advisers, research analysts, and portfolio managers by providing investors with validated performance data.
Currently, intermediaries often make self-verified claims about their performance, which can sometimes be exaggerated or misleading. SEBI’s proposed PVA would serve as an independent body responsible for validating claims related to investment advice, recommendations, mutual fund schemes, portfolio management services, algorithms, and more.
The PVA is suggested to be either a wholly-owned subsidiary of market infrastructure institutions (MIIs) or a jointly supported entity by multiple MIIs. Its primary purpose would be to validate the performance claims of intermediaries, allowing them to market their products based on these validations.
The agency would validate performance claims based on specified parameters like returns, risk, volatility, and other relevant factors. It would also be responsible for maintaining data, addressing grievances, and ensuring data privacy throughout the validation process.
SEBI has opened the proposal for public comments until September 21, seeking input on the establishment and functioning of the Performance Validation Agency.
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